Fast fashion: Boohoo profit piles up as online retailer forges ahead of competitors
Boohoo’s shares rose this morning as it announced it has bucked the trend in the struggling clothing retail sector with a 49 per cent rise in profit.
Read more: Boohoo shares fall despite explosive sales growth
The so-called fast fashion retailer, which targets 16-30 year olds with its Boohoo, Nasty Gal and Pretty Little Thing brands, recently hired former Primark director John Lyttle as its new chief executive.
The figures
Adjusted profit before tax rose to £76.3m in the year ending 28 February 2019, a 49 per cent rise on £51m the previous year, while revenue jumped 48 per cent to £856.9m.
The group had net cash of £190.7m, up on £133m the same time last year, while operating cash flow was £111.9m, from £76.2m the year before. Boohoo had total liabilities of £162m.
Why its interesting
Boohoo’s success flies in the face of rivals like Asos, which issued a profit warning last year and continues to struggle on the stock market. The retailer said it now has 7m active customers, an increase of nine per cent, as it ploughs on with rapid expansion by targeting a young audience who prefer low-cost clothes and shop on smartphones rather than in-store.
It also said it had expanded its presence across social media channels, a key part of its growth plan, with 5.9m followers on Instagram, 2.9m Facebook fans and around 500,000 followers on Twitter.
Profit was ahead of market expectations of £66.9m for the period, sending shares in early morning trading. The firm said it expected revenue to grow 25-30 per cent over the next year. It is new chief executive John Lyttle’s first results announcement with the firm, after starting the job last month. Lyttle is a former chief operating officer at Primark.
What Boohoo said
Lyttle said Boohoo’s “disruptive and proven business model” was behind the positive results.
“I’ve watched Boohoo group as a competitor… and I think some of the things they’ve done have been quite amazing,” he added.
Read more: City focuses on Boohoo as online giant hopes to defy retail gloom
“This has confirmed my belief and optimism that the group’s investments into its brands and infrastructure have allowed it to develop a scalable multi-brand platform that is well-positioned to disrupt, gain market share and capitalise on what is a truly global opportunity.”